CII Recommendations for Economic Growth: Investment, Employment, Exports & Manufacturing

The Confederation of Indian Industry (CII) recently released a set of recommendations to boost the growth rate of the Indian economy which is expected to make a strong recovery by the fiscal year end. The report titled “CII – Recommendations for Economic Growth” highlights some immediate impactful measures and also lists out detailed recommendations for specific sectors. The interventions include both short term and long-term measures to tackle economic challenges. Some of the major recommendations are in the key areas of investments, employment, exports and manufacturing.

A large number of infrastructure projects are currently facing multiple challenges including financing, delays in execution and implementation, insufficient investments etc. A National Infrastructure Project Monitoring Group in the Prime Minister’s Office should be set up to monitor and fast-track large, catalytic infra projects such as the Delhi Mumbai Industrial Corridor (DMIC), freight corridors, Housing for All etc. Spending on such large scale infra projects is important as these tend to have a multiplier effect on economic growth through job creation and generating higher demand.
Various recommendations have been made to reduce the pressure on working capital for MSMEs, including increasing the time allowed for interest payment from 60-90 days to 180-365 days before a loan turns into a Non-Performing Asset (NPA), expediting the adoption of Government e-Marketplace (a one-stop portal for procurement by government) for all states, allowing SMEs more time for paying taxes under GST and the creation of a capital insurance scheme to protect MSMEs against delayed payments.
Expediting and ensuring implementation of the Public Procurement Policy has been suggested as current contract conditions lead to lack of level playing field for local suppliers. Another recommendation is the use of Letters of Credit for purchases from domestic buyers to facilitate payments, which is currently being done only for foreign entities.
Other recommendations include ensuring policy certainty for all sectors and offering adequate lead times for compliance, easing processes by allowing self-certification, fast tracking approvals for affordable housing and amenities for projects such as connectivity, school, and primary health centers and designing incentive packages for large scale projects that will create jobs.

A number of labour reform measures have been suggested for promoting employment.
Reinstating the Fixed Term Employment provision for all manufacturing sectors would provide greater flexibility in employment and encourage increased hiring of workers in the formal sector. This has been done for the Textiles and Apparel sector.
Chapter V-B of the Industrial Disputes Act requires industrial establishments employing 100 and more workers to seek government permission for retrenchment, closure and lay-off. Establishments employing more than 10 workers and using power or employing 20 workers and not using power need to be registered under the Factories Act and meet a host of legal and regulatory compliances. Therefore, it is suggested that the limit be raised to 500 in the Industrial Disputes Act and the limit under the Factories Act be raised to 50.
Also, it is recommended that firms are offered fiscal incentives for creating incremental formal jobs.
With a view to simplify complex labour regulations, the consolidated labour codes could be brought out in line with the Second National Labour Commission recommendations.

For addressing the issues of poor quality exports and weak adoption of global standards, a National Standards Mission must be initiated to harmonize Indian standards with global standards.
Greater availability of credit to exporters is essential for boosting exporters. Thus, more lending by the commercial banks to exporters, especially to SME sector, is the need of the hour. Currently, export credit is too low and comprises only about 1% of total Commercial Banks’ lending.
Further, the lack of a dedicated agency for trade negotiations and remedial actions detracts from the export effort. An umbrella body such as the United States Trade Representative (USTR) or United States International Trade Commission (USITC) can engage in comprehensive trade discussions at a global level and identify trade remedies for Indian goods.
Another problem that Indian exporters face is with respect to lack of scale and branding. Indian embassies must be involved in brand building initiatives to grow the India product portfolio. Also, a 6×6 export market push (6 markets, 6 years) plan needs to be developed for key sectors, involving participating in trade shows, setting up Indian products centric showcase, permanent display centers, etc.
Other recommendations include exploring new markets by expediting FTA negotiations, signing of FTAs with key markets to give an instant boost to sectors such as textiles and automotives, providing targeted and result oriented export incentives, especially for products with high export potential, and developing state level export strategies for the promotion of goods and services, linkages to ports and trade facilitation.

An important recommendation in the Manufacturing sector is that minimum wages be fixed at realistic levels. A high level of minimum wages could prove to be unsustainable for the industry and these should be linked to productivity for better competitiveness.
For stimulating industrial development, building of industrial corridors and hubs and other common facilities should be accelerated. These could include creation of plug and play parks for manufacturing companies along with common testing, skill development, export facilitation and other facilities along with multi modal logistics network covering inland waterways, dedicated railway freight corridors, national roadways and ports and electronic tolling through Radio Frequency Identification (RFID).
These remedial measures could provide the economy with the necessary impetus that is required at this point of time.


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